HC Deb 24 November 1980 vol 994 cc9-10W
Mr. Robert Atkins

asked the Secretary of State for Industry if he will make a statement about the finances of the British Steel Corporation.

Sir Keith Joseph

Yes. On 26 September 1980 I announced that the Government had decided to increase the external finance limit for the British Steel Corporation, for the year 1980–81, to £971 million. This increase represented an extension of £400 million above the limit of £450 million set in November of last year, together with the further £121 million carried over from 1979–80 to take account of payments which could not be made that year.

The extra £400 million for the BSC has been found from the unallocated contingency reserve, within the planned level of public expenditure. A Winter Supplementary Estimate for Class V Vote 1 is being submitted to cover the additional finance required by the BSC, but it now appears likely that, before this Estimate can be approved next month, sums of up to £110 million will need to be provided by a repayable advance for the Contingencies Fund.

This increase in the BSC's EFL was foreshadowed in my statement to the House on 26 June. There has, however, been a sharp decline in United Kingdom demand for steel in recent moths, so that despite the closures which are taking place during 1980, which have already led to over 40,000 redundancies, the BSC has excess steelmaking capacity. The BSC's new corporate plan is expected in mid-December. Meanwhile, interim financial support from the Government is necessary to enable the BSC to continue to meet its debts until firm decisions about its future can be taken. When the Government have considered the BSC corporate plan, the EFL for 1980–81 and a final revised EFL for 1980–81 will be decided and announced.

The House will be aware that on 1 February this year the European Coal and Steel Community adopted a decision on State aids for steel. The intention of the decision, which we fully support, is to prevent member States from financing unnecessary increases in steel capacity or subsidising, on a continuing basis, uneconomic steelmaking operations. The Commission has been sent a copy of my statement of 26 September, and the Government will consult the commission, when the BSC corporate plan has been received, before final decisions are taken on the future financing of the corporation.

27. Mr. Chapman

asked the Secretary of State for Industry what is his latest estimate of the total subsidies to be paid to the British Steel Corporation during the current financial year; and how this figure compares with 1979–80.

Mr. Adam Butler

The external finance limit for the British Steel Corporation for the current year is £971 million. This limit will be reviewed when the corporate plan is received in December. The EFL covers capital investment, working capital needs and redundancy costs.

In 1979–80, the corporation's external financing requirements were £579 million, but in addition £121 million was carried forward into the current year to take account of payments which could not be made because of the steel strike.

36. Mr. Teddy Taylor

asked the Secretary of State for Industry what were the losses incurred by British Steel in the most recent annual period for which figures are available; and what estimate he has made of the trading results for 1981.

Mr. Adam Butler

The corporation's total loss from ordinary activities for the year ending 29 March 1980 was £545 million. The accounts for the half year to 27 September 1980 are not yet available but will be published by the corporation shortly. They are likely to show a greater loss than in the corresponding period last year, because of a sharp reduction in the volume of business.

No firm estimates for the full year 1980–81 can usefully be made before the Government have approved the corporate plan.